Incitec Pivot Ltd T.IPL

Primary Symbol: ICPVF

Chemicals Specialty Chemicals

Incitec Pivot Limited is an Australia-based manufacturer and supplier to the resources and agricultural sectors. Its segments include Asia Pacific and Americas. Asia Pacific segment includes Fertilisers Asia Pacific (Fertilisers APAC) and Dyno Nobel Asia Pacific (DNAP). Fertilisers APAC manufactures and sells fertilizers in Eastern Australia and the export market. It also manufactures, imports and sells industrial chemicals to the agricultural sector and other specialist industries. DNAP manufactures and sells industrial explosives and related products and services to the mining industry in the Asia Pacific region, Turkey and France. Americas segment includes Dyno Nobel Americas, which manufactures and sells industrial explosives and related products and services to the mining, quarrying and construction industries in the Americas (Canada, Mexico and Chile) and initiating systems to businesses in Australia, Turkey and South Africa. It also manufactures and sells industrial chemicals.

OTCPK:ICPVF - Post by User

Incitec Pivot Ltd > Storage business sale

<< Previous

Bullboard Posts

Next >>

Comment by jackhacketon Jan 13, 2020 5:29pm

206 Views

Post# 30548410

RE:RE:Storage business sale

Fantome wrote:

NiN777 wrote: Once they close the sale we're golden. As for the dividends I woild prefer to.see dividend as a % of FCF rather than a fixed amount. cut it now slightly to preserve their BBB credit rating and make sure the Heartland projects gets completely up and running.

A few thoughts...

1....setting the dividend to FCF would make the valuation of the company extremely difficult and would likely result in a lower SP due to the uncertainty associated wioth such a plan

2....the company has a BBB+ rating and so it would need to get TWO credit downgrades before the rating moved it to junk bond status.....the company is well withon all of its financial covenants and so it is highly unlikely that there would be a downgrade and so preservation of thecredit rating through a dividend cut is not necessary..

3....the Heartland project is on time on and budget and so it is within the original financing parameters...if the company numbers on the contribution of Heartland to EBITA are accurate then the project will lead to a huge inv=crease in cashflow which would give the company flexaibility to increase the dividend and to consider other growth initiatives...

Having said all that...Why is the SP in the doldrums???

1....Heartland is two years away from completion and so there is still significant project risk that something could go wrong..hence a SP risk discount

2...over the last couple of quarters the cashflow has been somewhat below estimates and has caused the payout ratio to rise to a level where maintaining the current dividend is a bit stretched....the 4Q report will give a another data point on this...

Sooooo...What I am i doing?

I am slightly overweight IPL..

My thinking is that the downside SP risk is relatively small while the upside in a couple of years when Heartland is operational and it produced the cashflow that is predicted... that a fair valuation of the company would be in the 33-38 dollar range...

So while am waiting to see how this plays out...I am collecting a decent dividend...